Flaherty casts doubt on how provinces use $2B in labour training funds

Finance Minister Jim Flaherty takes part in a press conference after meeting with private sector economist in Ottawa on Friday. CP/Sean Kilpatrick

Finance Minister Flaherty is raising questions about the way nearly $2 billion in federal Employment Insurance money transferred annually to provinces and territories to fund labour training is being spent across Canada.

Speaking after a meeting with bank economists on Canada’s economic outlook ahead of the 2013 budget Friday, Flaherty addressed reports that the budget could re-appropriate $1.95 billion in labour training and apprenticeship funds from provincial to federal control.

Responding to reporters, Flaherty questioned how wisely the money is being spent and whether it was resulting in more jobs.

“There is no question that the delivery of those kinds of services generally is better placed with the provinces and territories,” he said, later adding, “what we are looking at, though, is outcomes, are we seeing the kind of employment outcomes that we expected to see, what is the degree of accountability?”

It was the first time Flaherty acknowledged the funds may not be resulting in job growth.

Despite suggestions by opposition MPs that the federal government planned to dismantle labour programs altogether in the provinces or strip funding, Flaherty said the federal contribution would not budge.

“There is no suggestion, by the way, that there will be any reduction in spending by the government on skills training of Canada,” he said. “It’s too important. Its a priority of the budget.”

Still, the minister was vague on whether — and how much — money would stay under provincial control.

“The delivery of the services itself, that is, occupational counselling and so on, I think logically belongs with the provinces, (but) there are other areas in which we can deal with … how the system is funded.”

“We’ve got to do a better job of connecting the skills that people have and the education that people have with the jobs that are available here in Canada.”

iPolitics revealed last week that Flaherty was seriously considering switching over to a “voucher” type system that would see the federal government reclaim some or all of the $2 billion in Labour Market Development Agreements (LMDA) it signs with the provinces and distribute it via vouchers to Canadians. It is believed Canadians would take the vouchers to colleges and training centers to upgrade their skills and complete apprenticeship programs.

Critics of the current system — which sees provinces invest the cash in job training literacy, and support programs as they see fit — argue the money is being poorly spent and not resulting in enough skilled labourers entering the job market, particularly apprentices in the construction sector.

Canada’s booming energy sector is expected to see a shortage of more than 100,000 jobs in the next seven years.

Fielding questions on the matter from opposition MPs in the House this week, neither Flaherty or Prime Minister Stephen Harper denied the transfer is part of the budget, which is expected to focus on skills training.

If enacted, the plan would have the support of Canada’s biggest trades union, the Building Trades, and the Canadian Federation of Independent Business. The small-business lobby group’s president, Dan Kelly, told iPolitics he has met with government officials on numerous occasions to try and tackle the skilled labour shortage in Canada.

“We are not too fussed about which level of government is doing the spending,” Kelly said in an interview this week. “Employees and employers don’t really care which level of government is writing the check, they just care that it is effective.”

“We are supportive of the government trying different things,” he said, adding that the current system is producing “mixed” results. “Conceptually, what the feds are proposing makes sense.”

All of Canada’s provinces and territories are signatories to the LMDAs, with Ontario and Quebec getting the lion’s share of the money. According to Ontario’s Ministry of Training, Colleges and Universities, the province last year got a $552 million check from Ottawa to fund programs “to help people find jobs, upgrade their literacy skills, become apprentices, and transition to new careers.”

A ministry official pointed to four provincial programs being funded by the money: Employment Services, which helps Canadians find jobs; Second Career, which provides job training; the Literacy and Basic Skills Program, which “helped” people go on to further education or employment; and the Registered Apprenticeship program, which assists people in registering in an apprenticing program that will lead to becoming a journeyman.

The ministry did not provide figures for the number of Canadians that found jobs as a direct result of the LMDA monies. Audits that outline how each province spends the money and whether their achieving objectives have been produced, but provinces contacted by iPolitics refused to release them.

It is unclear exactly how the money is being spent. In Alberta, for example, the LMDA indicates that results will be judged by “increased access to, awareness and use of diverse training programs,” enhanced targeted labour force opportunities,” “increased literacy skills,” and “increased awareness of opportunities to provide quicker access to employment services for active EI clients.”

An official at Alberta’s Human Services department did not provide a list of agencies administering the funds. The province’s LMDA says targets for the money are “negotiated with the federal government and are not publicly posted.”

A HRSDC monitoring report of the LMDAs notes the LMDA monies are “flexible by design.” That same document says HRSDC “focuses on accountability, evaluation, and ongoing policy development.”

While details remain scant, Flaherty’s voucher plan is said to focus on apprenticeship programs for the construction sector, which is expected to see high retirement numbers in the coming years. While apprentices are registering in programs, graduation rates are low, with unions pushing for more tax breaks for apprentices and employers who hire them.

Statistics Canada reported that in 2010, 430,000 Canadians — mostly in the construction sector — registered for apprenticeship programs. In the same year, just over 36,000 people graduated from such programs.

Speaking at a skills committee meeting in December, Canada Building Trades director Bob Blakely pushed for the voucher plan. He said it was necessary to put “conditions” on LMDAs, including a condition “that the provinces actually get some results and train people.”

“Create a voucher system, whereby an apprentice can choose what institution he goes to and can take his per-seat cost with him,” Blakely said.

“There is no national apprenticeship system in Canada,” he lamented. “There is a hodgepodge of 13 sometimes squalling, sometimes co-operating, provincial and territorial entities.”